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Huaneng Power 2012 Profit Climbs Fourfold on Tariffs, Coal Costs

Huaneng Power International Inc., the publicly traded unit of China’s largest electricity producer, said 2012 profit rose more than fourfold because of higher tariffs and lower coal costs.

Profit climbed “primarily due to the carryover effect of the tariff adjustments in 2011, the decrease of coal price in 2012 and the effective cost controls by the company,” the Beijing-based power generator said in a statement to the Hong Kong stock exchange yesterday, without giving full-year numbers.

China raised prices charged by coal-fired power plants to distributors, known as on-grid tariffs, by 0.026 yuan per kilowatt-hour effective Dec. 1, 2011. Coal prices, which averaged 821 yuan ($132) per ton in 2011, dropped to 699 yuan per ton in 2012, benefiting power generators such as Huaneng Power and China Resources Power Holdings Co., according to research a note from Sanford C. Bernstein & Co. on Jan. 22.

Huaneng Power declined 0.6 percent to HK$7.23 at the noon trading break in Hong Kong. The benchmark Hang Seng Index gained 0.5 percent. The company will report its full annual earnings in March.

The 340 percent increase in profit to at least 5.72 billion yuan was lower than the mean estimate of 6.2 billion yuan from 15 analysts surveyed by Bloomberg News. Huaneng’s net was 1.3 billion yuan in 2011, according to the exchange filing.

Profit was less than expected because of a write off related to loss-making power plants, Pierre Lau, head of Asian utilities and clean energy research at Citigroup Inc., wrote in a note today.

The plants are primarily in western and inland Chinese provinces, where power tariffs are below the national average, according to the Citigroup research note.

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